DELINQUENCY MANAGEMENT

International best practice around the world suggests that sustainability is an attainable goal for
microfinance institutions (MFIs). Loan delinquency, which can lead to default, is probably the
largest single reason for downfall of institutions involved in the provision of credit. Even credit
institutions operating quite successfully, must continually address loan delinquency. The importance
of maintaining healthy loan portfolios and making good loans is often times generally appreciated
within an organisation. However, the strategic, operational and financial impact of poorly
performing loans is often times not fully appreciated, especially by credit staff.

Course Objective
This course developed by CGAP, provides participants with techniques and tools to improve
financial services and sustainability by setting realistic interest rates and managing funding. It gives
an opportunity to apply technical tools for controlling delinquency (one of the main reasons for
MFI collapse), ways to assess and maintain a healthy loan portfolio, increase the skills of the
institution, and increase responsiveness of the microfinance institution towards its clients.
Participants will be introduced to best practices in delinquency management.

The goals of this course are to analyse the cause of delinquency, appreciate the costs of delinquency
to the institution and how to control delinquency. Participants will learn how to develop an
institutional action plan to address delinquency analysis complemented with some ad hoc analysis on
an as needed basis.

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